Louisiana State v. U.S. Army Corps of Engineers, e

Case: 15-30962 Document: 00513648548 Page: 1 Date Filed: 08/23/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
No. 15-30962 August 23, 2016
Lyle W. Cayce
Clerk
LOUISIANA STATE, through the Coastal Protection and Restoration
Authority Board and the Coastal Protection and Restoration Authority,
Plaintiff - Appellee
v.
UNITED STATES ARMY CORPS OF ENGINEERS; RICHARD L. HANSEN,
Colonel, in his official capacity as District Commander for the New Orleans
District of the United States Army Corps of Engineers; MICHAEL C. WEHR,
Major, in his official capacity as Commander for the Mississippi Valley
Division of the United States Army Corps of Engineers; THOMAS P.
BOSTICK, Lieutentant General, in his official capacity as Chief of Engineers
and Commanding General of the United States Army Corps of Engineers;
STEVEN L. STOCKTON, in his official capacity as Director of Civil Works of
the United States Army Corps of Engineers; JO-ELLEN DARCY, in her official
capacity as Assistant Secretary of the Army (Civil Works),
Defendants - Appellants
Appeal from the United States District Court
for the Eastern District of Louisiana
Before DAVIS, JONES, and GRAVES, Circuit Judges.
EDITH H. JONES, Circuit Judge:
Following Hurricane Katrina, in which the breach of the Mississippi
River-Gulf Outlet (“MR-GO”) channel caused massive flooding, Congress
directed the U.S. Army Corps of Engineers (“Corps”) to close the MR-GO as a
federal navigation project and restore the surrounding ecosystem. To
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implement Congress’s 2007 mandate that the deauthorization be “cost
effective” and in accordance with a 2006 appropriation bill, the Corps sought a
cost-sharing arrangement with the State of Louisiana. Louisiana objected to
any cost-sharing arrangement and sued the Corps under the Administrative
Procedure Act (“APA”), contending that the Corps’ decision, expressed in two
Corps reports to Congress, was arbitrary and capricious and an abuse of
discretion because the relevant statutes require the federal government to bear
100 percent of the costs.
The district court agreed with Louisiana. The court rejected a statute of
limitations challenge to the suit and concluded that the relevant statutes
unambiguously require the Corps to bear all of the costs of deauthorizing the
MR-GO. We bifurcate the limitations issue and find Louisiana’s APA challenge
to the closure portion of the deauthorization project timely filed, but we dismiss
the challenge to the Corps’ decision concerning the ecosystem restoration
project because the agency has not taken final action under the APA. On the
merits, we reverse the district court’s judgment that overturned the required
cost-sharing between Louisiana and the Corps, which constitutes a reasonable
interpretation of ambiguous statutes.
BACKGROUND
The MR-GO is a 76-mile deep-draft navigation channel that was
constructed by the Corps at the direction of Congress and opened in 1968. See
In re Katrina Canal Breaches Litig., 696 F.3d 436, 441 (5th Cir. 2012). The
MR-GO cut through virgin Louisiana coastal wetlands to provide a shorter
commercial route between the Gulf of Mexico and the Port of New Orleans. Id.
at 441–42. The project designers opted not to armor the banks of the MR-GO
with foreshore protection and thus exposed the canal to erosion from the wake
of passing ships. Over the years, the channel expanded to well over three times
its original width. Id. at 442, 443 n.1. Local groups have contended that
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erosion and the mixing of saltwater and freshwater severely damaged the
channel’s ecosystem. In the aftermath of Hurricane Katrina, some blamed the
Corps’ design for exacerbating the Hurricane’s devastation.
Congressional Response Post-Hurricane Katrina: Deauthorization of MR-GO
In 2007, Congress passed the Water Resources Development Act (“2007
WRDA”), part of which directed the Corps to close the MR-GO to navigation
and restore the ecosystem. This goal was to be accomplished in two steps.
First, Congress directed the Assistant Secretary of the Army (Civil Works) to
submit a report to Congress detailing how the Corps would, inter alia,
“physically modify” the MR-GO and restore the “natural features of the
ecosystem.” Pub. L. No. 110-114, § 7013(a)(3)(B)(i)–(ii), 121 Stat. 1041, 1281
(2007). Upon submission of this report, the MR-GO would be “deauthorized”
as a federal project. Id. § 7013(a)(1). Second, the 2007 WRDA instructed the
Assistant Secretary to “carry out a plan to close the Mississippi River-Gulf
Outlet and restore and protect the ecosystem substantially in accordance with
[the report submitted to Congress] . . . if the Secretary determines that the
project is cost-effective, environmentally acceptable, and technically feasible.”
Id. § 7013(a)(4). Additionally, and as relevant to this case, in order to finance
the deauthorization of the MR-GO, Congress instructed the Corps to undertake
closure and restoration “in a manner that is consistent with the cost-sharing
requirements specified in the Emergency Supplemental Appropriations Act for
Defense, the Global War on Terror, and Hurricane Recovery, 2006 (Public Law
109-234).” Id. § 7012(b).
The bill referenced by the 2007 WRDA’s cost sharing provision is the
fourth of four supplemental appropriations bills passed by Congress in the
wake of Hurricane Katrina. See Emergency Supplemental Appropriations Act
for Defense, the Global War on Terror, and Hurricane Recovery, 2006, Pub. L.
109-234, tit. II, ch. 3, 120 Stat. 418, 453–55 (2006) (“Fourth Supplemental”).
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The last two of the four bills appropriated funds to the Corps to complete a
variety of relief and restoration tasks in New Orleans and throughout the
country.
Two provisions in the Fourth Supplemental relate to the MR-GO. 1
First, under the heading “Investigations,” the Fourth Supplemental
appropriated $3.3 million to the Corps to “develop a comprehensive plan, at
full Federal expense, to deauthorize deep draft navigation” on the MR-GO. 120
Stat. at 453. Second, through the Fourth Supplemental, Congress amended a
provision in the Third Supplemental that appropriated $75 million of a
$327,517,000 appropriation “for authorized operation and maintenance
activities along the [MR-GO].” Department of Defense, Emergency
Supplemental Appropriations to Address Hurricanes in the Gulf of Mexico, and
Pandemic Influenza Act, 2006, div. B, tit. I, ch. 3, 119 Stat. 2690, 2762 (2005)
(“Third Supplemental”). With the amendment, Congress added a provision to
the Third Supplemental, earmarking “$75,000,000 of the funds provided
herein . . . for the repair, construction or provision of measures or structures
necessary to protect, restore, or increase wetlands, to prevent saltwater
intrusion or storm surge.” Fourth Supplemental § 2304, 120 Stat. at 456.
The Corps’ Implementation of the 2007 WRDA
In January 2008, the Army’s Chief of Engineers (“Chief”) reported to the
Assistant Secretary his recommendations concerning the closure of the MR-
GO. The Chief recommended that the channel be closed to navigation by a
1 Other provisions of the Fourth Supplemental appropriated funds to the Corps to
undertake various reparation and restoration projects in the New Orleans area, such as
raising levee heights, repairing drainage canals throughout the City, and armoring the City’s
storm damage reduction system. See Fourth Supplemental, 120 Stat. at 454–55. The parties
substantially agree about the two provisions of the Fourth Supplemental that appropriated
funds for the MR-GO.
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rock wall spanning its width. The Chief recommended that the rock structure
be completed at full federal expense, but also recommended that a non-federal
sponsor bear the cost for the lands, easements, rights-of-way, relocations and
disposal areas (“LEERDs”), as well as for operation, maintenance, repair,
rehabilitation, and replacement (“OMRR&R”) of the structure. 2 Louisiana’s
Coastal Protection and Restoration Authority (“CPRA”) was identified as the
non-federal sponsor, and the Chief noted that his recommendation was “subject
to the non-Federal sponsor executing an agreement with the Department of
the Army prior to the Federal Government initiating construction of the
closure structure.” Importantly, this report only dealt with closing the MR-
GO, as the Chief indicated that the Corps’ proposal for ecosystem restoration
would be addressed in a supplemental report to be submitted at a later date.
On June 5, 2008, the Assistant Secretary transmitted the Chief’s report
to Congress and signed a record of decision, determining that the Chief’s plan
was “cost-effective, environmentally acceptable, and technically feasible.” On
October 31, 2008, the Corps and the State of Louisiana (acting through the
CPRA) entered into a Memorandum of Agreement (“MOA”) whereby both
parties agreed to the cost allocation set out in the Chief’s report. Despite the
CPRA’s explicit agreement to pay for LEERDs and OMRR&R by the terms of
the MOA, it insisted on inserting a provision that the CPRA “maintains that
the cost sharing and other non-Federal obligations that are required under the
2 This cost sharing allocation was determined by reference to the cost sharing
provisions of the 1986 Water Resources Development Act (“1986 WRDA”), which sets forth
cost sharing formulas that apply to projects when cost sharing allocations are not established
by another statute. See 33 U.S.C. § 2218. The Corps relied on 33 U.S.C. § 2213(i), which
provides that “non-Federal interests . . . shall provide all lands, easements, rights-of-way,
and dredged material disposal areas required for the project and perform all necessary
relocations,” and 33 U.S.C. § 2213(j)(1), which provides that “[a]ny project to which this
section applies . . . shall be initiated only after non-Federal interests have entered into
binding agreements with the Secretary to pay 100 percent of the operation, maintenance, and
replacement and rehabilitation costs of the project.”
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MOA are inconsistent with the intentions of Congress as it relates to the
closure and ecosystem restoration plan.”
The Corps addressed the second half of the MR-GO project—restoring
the ecosystem—in September 2012 when the Chief submitted a supplemental
report to the Assistant Secretary. The Supplemental Report recommended
that the federal government would pay for 65 percent of the restoration project
and a non-federal sponsor would pay for the other 35 percent. 3 Adhering to its
belief that the 2007 WRDA and the Fourth Supplemental required the federal
government to bear 100 percent of the far more costly restoration project (in
addition to the full cost of the closure project), the CPRA refused to become the
non-federal sponsor. Consequently, when the Assistant Secretary transmitted
the Supplemental Report to Congress on September 23, 2013, her transmission
letter declared only $1.3 billion of the $2.9 billion restoration plan to be “cost-
effective, environmentally acceptable and technically feasible.” The Assistant
Secretary “defer[red] . . . a determination” on the remaining $1.6 billion. Even
with respect to the portion of the plan that the Assistant Secretary determined
to be cost-effective, however, she acknowledged that a non-federal sponsor had
yet to be identified and that the Office of Management & Budget “noted that
any construction work would require a cost sharing non-federal sponsor.”
Consequently, the Assistant Secretary’s record of decision approved a “portion”
of the plan as cost-effective, environmentally acceptable, and technically
feasible, “subject to identification of a cost-sharing” partner.
3 The Corps’ cost sharing allocation was based upon the cost sharing formula
established by the 1986 WRDA, see supra note 2, the relevant portion of which provides that
“[t]he non-Federal share of the cost assigned to “environmental protection and restoration”
projects “shall be” 35 percent. See 33 U.S.C. § 2213(c)(7).
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The Corps has completed building the rock wall to close the MR-GO to
navigation, but the ecosystem restoration portion of the project has not moved
forward.
Procedural History
On October 28, 2014, Louisiana (acting through the CPRA) sued the
Corps under Section 706 of the APA. The district court granted Louisiana’s
motion for summary judgment. The court first held that Louisiana’s lawsuit
was not barred by the six-year statute of limitations, 28 U.S.C. § 2401, which
applies to civil actions against the United States. The court rejected the Corps’
argument that the State’s claim accrued when the Corps submitted to
Congress its June 5, 2008 Deauthorization Report. Instead, the court held that
the MOA entered into by Louisiana and the Corps on October 31, 2008 was the
relevant final agency action because the MOA determined Louisiana’s “rights
and obligations” and was the agency action from which “legal consequences
could flow.” 4
The court then held that the Corps’ interpretation of the 2007 WRDA
and the Fourth Supplemental was not entitled to Chevron deference. The court
held that the Corps’ interpretation of the relevant statutes failed Step 1 of
Chevron because the “WRDA 2007, read in conjunction with the 4th
Supplemental, unambiguously requires the Corps to complete the MRGO
closure and ecosystem restoration project at full federal expense.” Though the
court acknowledged that the Fourth Supplemental is “silent as to how such
project [MR-GO deauthorization] would ultimately be funded,” the court drew
4 Louisiana filed this lawsuit on October 28, 2014. The lawsuit would be time-barred
by 28 U.S.C. § 2401 if the final agency action were determined to be the June 5, 2008
transmission of the Deauthorization Report to Congress, but the lawsuit would be timely if
the final agency action resulted from the October 31, 2008 MOA.
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a parallel between the use of the heading “Construction” in both the 2007
WRDA and the Fourth Supplemental.
Under the “Construction” heading in the Fourth Supplemental, Congress
appropriated $20.2 million to reduce the risk of storm damage to the greater
New Orleans metropolitan area—at full Federal expense—by restoring
surrounding wetlands affected by “navigation, oil and gas, and other channels.”
Because the restoration of wetlands affected by “navigation . . . and other
channels” was to be carried out at full Federal expense, the district court
reasoned, Congress’s direction to the Corps to close the MR-GO and restore its
wetlands in the 2007 WRDA must also be done at full Federal expense because
both statutes utilize the “Construction” heading. Given this interpretation
that the statutes unambiguously require the Corps to carry out the MR-GO
deauthorization at full Federal expense, the district court held that the Corps’
contrary interpretation permitting cost sharing was arbitrary and capricious
and an abuse of discretion. The Corps has appealed.
STANDARD OF REVIEW
“We review a grant of summary judgment de novo, applying the same
standard as the district court.” Buffalo Marine Servs. Inc. v. United States,
663 F.3d 750, 753 (5th Cir. 2011). As this case arises under the Administrative
Procedure Act (“APA”), this court may set aside agency action “only if it is
arbitrary, capricious, an abuse of discretion, not in accordance with law, or
unsupported by substantial evidence on the record taken as a whole.” Id.
(citation omitted); 5 U.S.C. § 706(2). However, “we owe substantial deference
to an agency’s construction of a statute that it administers.” Alwan v. Ashcroft,
388 F.3d 507, 510 (5th Cir. 2004) (citing Chevron U.S.A, Inc. v. Nat. Res. Def.
Council, 467 U.S. 837, 842, 104 S. Ct. 2778, 2781–82 (1984)). “Under Chevron
we presume that when an agency-administered statute is ambiguous with
respect to what it prescribes, Congress has empowered the agency to resolve
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the ambiguity. The question for a reviewing court is whether in doing so the
agency has acted reasonably and thus has ‘stayed within the bounds of the
law.’” Utility Air Regulatory Grp. v. EPA, 134 S. Ct. 2427, 2439 (2014) (citation
omitted).
DISCUSSION
We consider in turn the Corps’ arguments that Louisiana’s suit is barred
by the six-year statute of limitations and, alternatively, that its cost-sharing
decisions are permissible.
I. Statute of Limitations & Final Agency Action
28 U.S.C. § 2401(a) states: “every civil action commenced against the
United States shall be barred unless the complaint is filed within six years
after the right of action first accrues.” Because neither the 2007 WRDA nor
the Fourth Supplemental provides for judicial review of the Corps’ decisions,
Louisiana’s lawsuit was brought under the APA, which subjects to judicial
review “final agency action for which there is no other adequate remedy in a
court.” 5 U.S.C. § 704. Since Louisiana’s “right of action first accrues” under
the APA when the agency takes “final agency action,” the State must have
sought review of final agency action that occurred within the six years before
it filed suit on October 28, 2014. Resolution of the timeliness issue thus turns
on whether the agency action Louisiana is challenging was final.
A. Governing Principles
Agency action is “final” if two conditions are satisfied: “First, the action
must mark the consummation of the agency’s decisionmaking process—it must
not be of a merely tentative or interlocutory nature. And second, the action
must be one by which rights or obligations have been determined, or from
which legal consequences will flow.” Bennett v. Spear, 520 U.S. 154, 177–78,
117 S. Ct. 1154, 1168 (1997) (internal quotation marks and citations omitted).
“The APA’s judicial review provision also requires that the person seeking APA
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review of final agency action have ‘no other adequate remedy in a court,’
5 U.S.C. § 704.” Sackett v. EPA, 132 S. Ct. 1367, 1372 (2012).
Agency action may mark the consummation of the agency’s
decisionmaking process if the agency action “is not subject to further agency
review,” id. at 1372, which occurs when the agency has “asserted its final
position on the factual circumstances underpinning” the agency action,
Alaska Dep’t of Envtl. Conservation v. EPA, 540 U.S. 461, 483, 124 S. Ct. 983,
999 (2004) (internal citation and quotation marks omitted). Additionally, as
we recently noted, “legal consequences are created whenever the challenged
agency action has the effect of committing the agency itself to a view of the law
that, in turn, forces the plaintiff either to alter its conduct, or expose itself to
potential liability.” Texas v. EEOC, 2016 WL 3524242, at *8 (5th Cir. June 27,
2016); see also U.S. Army Corps of Eng’rs v. Hawkes Co., Inc., 136 S. Ct. 1807,
1814 (2016) (noting that “legal consequences” were created by the Corps’
issuance of a “negative jurisdictional determination”—a document indicating
that the regulated party’s land does not contain “waters of the United States”—
because such a determination “narrows the field of potential plaintiffs and
limits the potential liability” of the regulated party).
B. The Closure Project
1. The Assistant Secretary’s Record of Decision Transmitting the 2008
Deauthorization Report
The Corps argues that the 2008 Deauthorization Report constitutes final
agency action for the closure portion 5 of the deauthorization project, and
5 Louisiana contends that the deauthorization of the MR-GO is one indivisible project
made up of both closure and ecosystem restoration, both of which had to be addressed by the
Corps before there could be final agency action. The Corps, in contrast, conceives of the
deauthorization project as proceeding in two discrete steps—first closure, then ecosystem
restoration. The Corps argues that it has discretion to choose to tackle a large project such
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Louisiana’s APA challenge to this portion of the project was untimely because
the Assistant Secretary transmitted the Report to Congress more than six
years before Louisiana sued. The Corps contends that the transmission of the
Deauthorization Report by the Assistant Secretary, the highest ranking officer
of the Army and the person who oversees the Corps, consummated the agency
decisionmaking process. The Corps also argues that transmittal of the
Deauthorization Report had legal consequences: deauthorizing the MR-GO,
obliging the Corps to begin effectuating the plan outlined in the Report, and
requiring the State to agree to share the costs of closure and maintaining the
rock wall.
Although this issue is not free from doubt, we disagree with the Corps’
position. It is true that the Assistant Secretary’s transmission of the 2008
Report to Congress bears some indicia of finality. The Report is titled “Final
Deauthorization Report,” the Assistant Secretary certified the closure plan as
“cost-effective, environmentally acceptable, and technically feasible,” and the
Corps’ statutory duty to carry out the closure in substantial accordance with
the Report was triggered by its transmission. Crucially, however, with regard
to the key question of cost-sharing, the 2008 Deauthorization Report is
decidedly less definite. Indeed, the Report—which the Assistant Secretary’s
as this one in multiple steps and that its decision to proceed in multiple steps does not mean
that earlier steps are ipso facto non-final.
We agree with the Corps that it was permissible for the agency to address the
deauthorization project in two steps, dealing with the closure first and the ecosystem
restoration second. “[O]rdinarily, agencies have wide latitude to attack a regulatory problem
in phases and [] a phased attack often has substantial benefits.” Grand Canyon Air Tour
Coalition v. Fed. Aviation Admin., 154 F.3d 455, 471 (D.C. Cir. 1998); see also Mass. v. EPA,
549 U.S. 497, 524, 127 S. Ct. 1438, 1457 (2007) (“Agencies, like legislatures, do not generally
resolve massive problems in one fell regulatory swoop . . . . They instead whittle away at
them over time, refining their preferred approach as circumstances change and as they
develop a more nuanced understanding of how best to proceed.”); Cobell v. Norton,
240 F.3d 1081, 1095 (D.C. Cir. 2001) (noting that “a single step or measure [of an on-going
program] is reviewable” if it is a final agency action).
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record of decision incorporated by reference—states that the recommendation
as to MR-GO’s closure is “made with the provision that, prior to
implementation, the non-Federal sponsor [CPRA] agrees with responsibilities
and cost sharing requirements.” Further, in his January 2008 letter
transmitting the report to the Assistant Secretary, the Chief noted that his
recommendation “is subject to the non-Federal sponsor executing an
agreement with the Department of the Army prior to the Federal Government
initiating construction of the closure structure.”
Therefore, the Assistant Secretary’s record of decision transmitting the
Deauthorization Report appears to be “interlocutory,” in that it anticipates the
necessity of further agency action before the closure project can be
implemented. Bennett, 520 U.S. at 178, 117 S. Ct. at 1168–69. Because only
the MOA could bind Louisiana to contribute financially to the deauthorization
project, the execution of the MOA was not simply a ministerial act
implementing final agency action, as the Corps contends. Instead, the
certification of the Assistant Secretary that the project was cost-effective
hinged directly on the federal government’s obtaining a non-federal sponsor to
share the costs. Cf. Texas v. EEOC, 2016 WL 3524242, at *6 (“the Guidance
suggests that its provisions are to be taken as conclusive”).
Had the government been unable to obtain Louisiana’s assent to cost-
sharing, it is likely that the closure project proposed in the 2008 Report could
not have gone forward. That this would have been much more than “a mere
possibility that the agency might reconsider in light of ‘informal discussion’
and invited contentions of inaccuracy,” Sackett, 132 S. Ct. at 1372, is evidenced
by the fact that Louisiana’s refusal to enter into an MOA sharing ecosystem
restoration costs has stymied that portion of the MR-
GO project. With the key provision of how to finance the closure yet to be
finalized, the Assistant Secretary’s transmission of the 2008 Deauthorization
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Report to Congress did not mark the consummation of the agency’s
decisionmaking process.
The 2008 Deauthorization Report also failed to determine “rights and
obligations” of the parties or give rise to “direct and appreciable legal
consequences.” Bennett, 520 U.S. at 178, 117 S. Ct. at 1168–69. Unlike an
administrative rulemaking or adjudication that purports to bind parties and
alter their conduct, the Secretary’s transmission of the Deauthorization Report
to Congress could not “force [Louisiana] to alter its conduct, or expose itself to
potential liability.” Texas v. EEOC, 2016 WL 3524242, at *8. Nothing about
the Assistant Secretary’s transmission of the 2008 Deauthorization Report to
Congress regulated Louisiana or could have bound the State to pay for the
LEERDs and OMRR&R of the rock structure used to close the MR-GO.
Viewed from the State’s perspective, although the Corps’ insistence on
cost sharing may have put pressure on Louisiana to comply or else risk
protracted negotiations with the Corps and a lengthy timetable for completing
the closure of the MR-GO, any such consequences are practical, as opposed to
legal, ones. See Reliable Automatic Sprinkler Co., Inc. v. Consumer Prod.
Safety Comm’n, 324 F.3d 726, 732 (D.C. Cir. 2003) (distinguishing between
practical harms and legal harms for purposes of the final agency action
requirement under the APA); Flue-Cured Tobacco Cooperative Stabilization
Corp. v. EPA, 313 F.3d 852, 859 (4th Cir. 2002) (noting that an EPA Report
submitted to Congress “carrie[d] no legally binding authority” and the “coercive
pressures” produced by the Report were not “direct and appreciable legal
consequences”).
The Assistant Secretary’s transmission of the 2008 Deauthorization
Report thus failed to create any legal consequences for Louisiana and differs
significantly from the legal consequences that typify final agency action
reviewable under the APA. Judicially reviewable agency actions normally
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affect a regulated party’s possible legal liability; these consequences tend to
expose parties to civil or criminal liability for non-compliance with the agency’s
view of the law or offer a shelter from liability if the regulated party complies.
Cf. Hawkes Co., 136 S. Ct. at 1814 (noting that a negative JD from the Corps
“both narrows the field of potential plaintiffs and limits the potential liability”
of the regulated party); Bennett, 520 U.S. at 170, 178, 117 S. Ct. at 1165, 1168–
69 (noting that the Fish and Wildlife Service’s “Biological Opinion,” which
stated that the Bureau of Reclamation’s operation of a federal reclamation
scheme threatened two endangered species of fish, had “direct and appreciable
legal consequences” because disregarding the Biological Opinion’s conclusions
threatened the future prospect of substantial civil and criminal penalties);
Frozen Food Express v. United States, 351 U.S. 40, 44, 76 S. Ct. 569, 571 (1956)
(order of Interstate Commerce Commission was final agency action because it
“warns every carrier, who does not have authority from the Commission to
transport [specified] commodities, that it does so at the risk of incurring
criminal penalties.”); see also Texas v. EEOC, 2016 WL 3524242, at *8 (EEOC
Guidance document provides regulated entities a “safe harbor from DOJ
referral, and thus ultimately liability, only if employers alter their hiring
policies to comply with the Guidance’s directives”).
2. The October 31, 2008 Memorandum of Agreement
The MOA, in contrast, is the relevant final agency action with respect to
cost allocation of the closure project. First, the MOA is the consummation of
the Corps’ decision-making process: it is not tentative or interlocutory, as it is
a binding agreement between the Corps and Louisiana that clearly sets out the
cost allocation for the closure project. The MOA therefore fulfills the condition
that the Assistant Secretary’s recommendation of cost-effectiveness
contemplated: agreement of the non-federal sponsor to the cost-sharing
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allocation set forth in the Deauthorization Report. The agreement marks the
consummation of the agency’s decision-making process.
Second, the MOA determines the parties’ rights and obligations and has
legal consequences. Importantly, unlike the Assistant Secretary’s record of
decision transmitting the Deauthorization Report, legal consequences ensue
from the MOA’s contractual nature; had Louisiana broken the terms of this
agreement, the Corps could have sued the State to enforce its terms.
Because the October 31, 2008 MOA, not the Assistant Secretary’s
transmission of the 2008 Deauthorization Report, constituted the final agency
action, Louisiana’s suit filed on October 28, 2014 was within the statute of
limitations. 6
C. Ecosystem Restoration
The Corps does not contest the timeliness of Louisiana’s challenge to the
cost allocation provision of the ecosystem restoration project contained in the
2012 Supplemental Report, and timeliness does not raise a jurisdictional issue
in this court. Clymore v. United States, 217 F.3d 370, 374 (5th Cir. 2000).
Final agency action, however, is a jurisdictional prerequisite of judicial review.
Am. Airlines, Inc. v. Herman, 176 F.3d 283, 287 (5th Cir. 1999). For many of
the same reasons that the Assistant Secretary’s transmission of the 2008
Deauthorization Report was not final agency action, we conclude that the
transmission of the 2012 Supplemental Report likewise fails the test of finality,
and judicial review is premature.
First, even more so than the 2008 Report, the transmission of the 2012
Supplemental Report does not mark the consummation of the Corps’ decision-
making regarding the financing of the ecosystem restoration project. This
Louisiana also has “no other adequate remedy in a court,” 5 U.S.C. § 704, as neither
6
the 2007 WRDA nor the Fourth Supplemental provides for judicial review of the Corps’
implementation of the MR-GO deauthorization. Sackett, 132 S. Ct. at 1372.
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action is both tentative and interlocutory, Bennett, 520 U.S. at 178, 117 S. Ct.
at 1168, as it necessarily contemplates future agency action. The Assistant
Secretary approved only part of the ecosystem restoration plan—$1.3 billion of
the $2.9 billion projected cost—as cost effective; the Assistant Secretary
“defer[red] . . . a determination” on the remaining $1.6 billion. As to the
approved portion, the Assistant Secretary cautioned that implementation
could not proceed under the plan submitted to Congress until a non-federal
sponsor agrees to bear 35 percent of the costs. Without a non-federal sponsor,
to arrive at a cost effective plan the Corps may need to alter the current cost
allocation. That the agency may need to re-work its cost allocation does not
appear to be a “mere possibility,” Sackett, 132 S. Ct. at 1372, because Louisiana
has refused to be the non-federal sponsor under the Corps’ 65-35 allocation,
and the ecosystem restoration plan has yet to be implemented.
Further, the Secretary’s transmission of the 2012 Supplemental Report
does not “determine rights or obligations” or create “legal consequences.” Like
the 2008 Deauthorization Report, the 2012 Report does not regulate Louisiana
and cannot bind the State to pay for 35 percent of the ecosystem restoration
project. Nor does this report inflict legal consequences on Louisiana for the
State’s non-acquiescence, such as exposure to civil or criminal liability for
failure to comply. Cf. Hawkes Co., 136 S. Ct. at 1814; Bennett, 520 U.S. at 170,
178, 117 S. Ct. at 1168–69; Texas v. EEOC, 2016 WL 3524242, at *8.
Because the Assistant Secretary’s transmission of the 2012
Supplemental Report was not a final agency action, we lack jurisdiction to
consider Louisiana’s APA challenge to the cost-share allocation set out in that
Report. We must vacate the district court’s judgment to the extent it opined
on the cost-sharing proposal set forth in the 2012 Supplemental Report.
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II. Chevron Deference
The second issue on appeal concerns the district court’s application of the
Chevron doctrine to the Corps’ interpretation of two statutes, the 2007 WRDA
and the Fourth Supplemental, to support cost-sharing mandated in its 2008
Deauthorization Report. Under Chevron, “we must first decide whether
‘Congress has directly spoken to the precise question at issue,’ and if it has, we
apply Congress’s answer to the question.” Contender Farms LLP v. United
States Dep’t of Agric., 779 F.3d 258, 268 (5th Cir. 2015) (citing Chevron,
467 U.S. at 842–43, 104 S. Ct. at 2781–82). The court evaluates a statute using
the “traditional tools of statutory construction:” text, structure, and legislative
history. Id. Second, “if the statute is silent or ambiguous with respect to the
specific issue, the question for the court is whether the agency’s answer is
based on a permissible construction of the statute.” Id.
Louisiana argues that the Corps’ interpretation of the 2007 WRDA and
Fourth Supplemental fails both steps of Chevron analysis.
A. Chevron Step 1
The 2007 WRDA directs the Corps to carry out deauthorization of the
MR-GO in a manner consistent with the cost-sharing requirements in the
Fourth Supplemental; consequently we look to that law to determine whether
Congress unambiguously spoke to the question who must pay for the closure
project. See 2007 WRDA, §7012(b). Louisiana points to two provisions of the
Fourth Supplemental that, the State contends, reflect Congress’s
unambiguously expressed intention for the Corps to bear 100 percent of the
costs to close MR-GO: (1) the Fourth Supplemental’s amendment to the Third
Supplemental, which provides $75 million for “repair, construction or provision
of measures or structures necessary to protect, restore, or increase wetlands,
to prevent saltwater intrusion or storm surge”; and (2) the Fourth
Supplemental’s appropriation of $20.2 million for “reducing the risk of storm
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damage to the greater New Orleans metropolitan area, at full federal expense,
by restoring the surrounding wetlands.”
We disagree with Louisiana’s proffered interpretation of these
provisions. As previously mentioned, two provisions of the Fourth
Supplemental expressly relate to the MR-GO. Under the heading
“Investigations,” $3.3 million is appropriated to the Corps to “develop a plan,
at full Federal expense to deauthorize deep draft navigation” on the MR-GO,
120 Stat. at 453. While this provision states that the plan will be produced at
full federal expense, it says nothing about who will pay for the implementation
of the plan. The other provision, on which Louisiana focuses, amends the Third
Supplemental. Under the “Operations and Maintenance” heading, the Third
Supplemental provides that, out of $325,517,000 appropriated to “dredge
navigation channels and repair other Corps projects” in the wake of Hurricane
Katrina, $75 million of that amount “shall be used for authorized operation
and maintenance activities along the [MR-GO].” 119 Stat. at 2762. The Fourth
Supplemental’s amendment adds to that a provision stating that $75 million
“of the funds provided herein shall be used for the repair, construction or
provision of measures or structures necessary to protect, restore, or increase
wetlands, to prevent saltwater intrusion or storm surge.” 120 Stat. at 456.
In addition to the $75 million appropriated for operation and
maintenance activities of the MR-GO, then, this amendment earmarks another
$75 million for general purposes necessary to protect or restore wetlands.
While this allocation might provide a source of federal funds for closing the
MR-GO, it does not compel the federal government to bear the entire cost of
constructing a structure, let alone the additional cost of LEERDs and
OMRR&R. It is arguable, but hardly unambiguous, to infer that the Third
Supplemental’s provision of $75 million for “authorized operation and
maintenance activities along the” MR-GO renders the federal government
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responsible for the OMRR&R of the closure structure. Indeed, once the
Deauthorization Report was transmitted to Congress, the MR-GO was no
longer an “authorized operation and maintenance activit[y]” and may have
become ineligible for those funds. See 2007 WRDA § 7013(a)(1) (noting that,
upon submission of the Deauthorization Report, the MR-GO “is not
authorized”).
We also reject Louisiana’s argument that the Fourth Supplemental’s
appropriation of $20.2 million to the Corps unambiguously establishes that the
closure of the MR-GO must be done at full federal expense. The $20.2 million
“may be used to reduce the risk of storm damage to the New Orleans
metropolitan area, at full federal expense, by restoring surrounding wetlands
through measures to begin to reverse wetland losses in areas affected by
navigation, oil and gas, and other channels.” 120 Stat. at 454. This
appropriation facilitates the Corps’ general handling of ecosystem restoration
but it does not address a closure structure for the MR-GO, much less who will
bear the cost for the operations and maintenance of the structure. 7
Even if the statutory text included the construction of a MR-GO closure
structure within the ambit of “reduc[ing] the risk of storm damage,” the
expenditure of the $20.2 million is discretionary, as evidenced by the term
“may be used” in the statute, and the Corps did not draw upon this particular
appropriation to finance the closure of the MR-GO. Finally, even if, as the
district court concluded, this appropriation could impute some responsibility
to the Corps for constructing the closure structure because it appears under
7 Moreover, there is reason to think that these funds are inapplicable to the MR-GO
deauthorization, as the Conference Report indicates that the $20.2 million was to be used for
projects unrelated to the MR-GO closure. See H.R. Conf. Rep. 109-494, at 114 (“The Corps is
further directed to use these funds in the following manner: $10,100,000 to modify the
Caernarvon Freshwater Diversion structure or its operations; and $10,100,000 to protect the
shoreline along the Barataria Basin Landbridge in Jefferson Parish, Louisiana”).
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the statutory heading “Construction,” it does not follow that the provision could
also be construed to require the federal government to bear the entire cost for
operation and maintenance of the structure in perpetuity. Such an approach
is totally inconsistent with the 2007 WRDA’s overarching goal of deauthorizing
the MR-GO.
Because no provision in the Fourth Supplemental establishes how the
closure of the MR-GO should be financed, this detail was left to be resolved by
the Corps. At best, from the State’s standpoint, the relevant statutes are
ambiguous with respect to who will bear the costs of the MR-GO closure. 8
B. Chevron Step 2
Accepting the possibility of statutory ambiguity, Louisiana alternatively
argues that the Corps’ cost-share allocation is not even a permissible
interpretation of the 2007 WRDA and Fourth Supplemental. The State
contends that the Corps’ decision to derive its cost-sharing allocation from the
cost-sharing formulas laid down in the 1986 WRDA was impermissible because
the Corps relied on the wrong provision. The Corps should have derived the
cost-sharing allocation from 33 U.S.C. § 2212, which sets out cost-sharing
formulas for “inland waterway transportation” projects and directs the federal
government to bear 100 percent of the cost for LEERDs and OMRR&R of such
projects, not 33 U.S.C. § 2213, which sets out cost-sharing formulas for flood
control projects and projects with “other purposes,” id. § 2213(c).
8 Louisiana also contends that the history of the MR-GO project supports the
argument that Congress instructed that the MR-GO deauthorization should be completed at
full federal expense. Louisiana relies on Congress’s instruction in the 1950s that the MR-GO
be constructed in accordance with a 1951 Corps Engineers Report, which stated that the
construction of the MR-GO would not require local cooperation; and a 2007 floor statement
by Louisiana Senator David Vitter. Neither a 1951 Corps Report nor a lone floor statement
from the State’s own Senator, however, provides insight into the intent of the 2007 Congress
or clarifies an otherwise ambiguous text.
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“Chevron directs courts to accept an agency’s reasonable resolution of an
ambiguity in a statute that the agency administers.” Michigan v. EPA,
135 S. Ct. 2699, 2707 (2015). “Even under this deferential standard, however,
‘agencies must operate within the bounds of reasonable interpretation.’” Id.
(citing Utility Air Regulatory Grp. v. EPA, 134 S. Ct. 2427, 2442 (2014)). “And
reasonable statutory interpretation must account for both the specific context
in which language is used and the broader context of the statute as a whole.”
Utility Air Regulatory Grp., 134 S. Ct. at 2442 (citations, ellipses, and
quotation marks omitted). “Thus, an agency interpretation that is inconsistent
with the design and structure of the statute as a whole does not merit
deference.” Id. (citation and quotation marks omitted). “If the agency’s
reasons and policy choices conform to minimal standards of rationality, then
its actions are reasonable and must be upheld.” Tex. Oil & Gas Ass’n v. EPA,
161 F.3d 923, 934 (5th Cir. 1998).
The Corps’ interpretation of the 2007 WRDA and the Fourth
Supplemental is well within the bounds of permissible interpretation. As we
noted, the Fourth Supplemental appropriates funds to the Corps to deal with
the fallout from Hurricane Katrina. To achieve its various reparation and
restoration goals, Congress employed different methods of instructing the
Corps how to finance certain projects. For example, Congress appropriated
funds for some purposes to assist in repairing hurricane damage, but it did not
specify that the projects be undertaken at full federal expense. 9 In other
cases, Congress directed the federal funds to specific projects and instructed
9 See, e.g., 120 Stat. at 454 (“to dredge navigation channels and repair other Corps
projects related to the consequences of Hurricane Katrina and other hurricanes of the 2005
season, $3,200,000 to remain available until expended”).
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that the projects be undertaken at “full federal expense.” 10 Significantly,
however, for many of those “full federal expense” projects, Congress expressly
directed the Corps to refrain from expending funds until “nonfederal interests
have entered into binding agreements with the Secretary requiring the non-
Federal interests to pay 100 percent of the operation, maintenance, repair,
replacement, and rehabilitation costs of the project.” 120 Stat. at 455.
The Corps’ cost sharing allocation as regards OMRR&R of the closure
structure, then, mirrors one of the funding choices set out in the Fourth
Supplemental: while the Corps would pay to construct the closure structure,
Louisiana would be responsible for the OMRR&R. By employing a cost-
sharing method utilized in the Fourth Supplemental itself, the Corps has
clearly sought to carry out the closure of the MR-GO “in a manner consistent
with the cost-sharing requirements in the [Fourth Supplemental],” 2007
WRDA § 7012(b). This is unquestionably “within the bounds of reasonable
interpretation,” Utility Air Regulatory Grp., 134 S. Ct. at 2442.
It was also reasonable for the Corps to rely, in the absence of direction
from the Fourth Supplemental, on the cost-sharing provisions set forth in the
1986 WRDA that apply to “all projects in this Act” “unless otherwise specified”
when arriving at its cost-sharing allocation for obtaining the LEERDs.
33 U.S.C. § 2218. 11 Louisiana argues that the Corps should have followed the
10 See, e.g., 120 Stat. at 454–55 (directing the Corps to use funds to “modify, at full
federal expense, authorized projects in southeast Louisiana . . . $530,000,000 shall be used
to modify the 17th Street, Orleans Avenue, and London Avenue drainage canals and install
pumps and closure structures at or near the lakefront; $250,000,000 shall be used for storm-
proofing interior pump stations . . . $350,000,000 shall be used to improve protection at the
Inner Harbor Navigation Canal”).
11See generally NICOLE T. CARTER & CHARLES V. STERN, CONG. RESEARCH SERV.,
R41243, ARMY CORPS OF ENGINEERS: WATER RESOURCE AUTHORIZATIONS, APPROPRIATIONS,
AND ACTIVITIES 17–18 (2016) (detailing the “Evolution of [the] Corps[’s] Civil Works Mission”
and noting that the 1986 WRDA “fundamentally transformed the rules for Corps water
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provision of the 1986 WRDA that sets forth the cost sharing formula for “inland
waterway transportation” projects. This assertion, however, does not render
impermissible the Corps’ reliance on the catchall provision for projects with
purposes other than flood control and inland waterway transportation. See
33 U.S.C. § 2213(c).
While section 2212 sets forth the cost share formulas for inland
waterway transportation projects, section 2213 announces cost share formulas
for flood control projects, nonstructural flood control projects, and projects with
other purposes. The Corps could have reasonably concluded that, given section
2212’s instruction that the federal government is to bear 100 percent of cost for
operations and maintenance of inland waterway transportation projects, the
cost-sharing formulas in this section are more appropriate for federal projects
designed to facilitate “navigation on the inland waterways,” 33 U.S.C.
§ 2212(b), instead of projects designed to close such waterways to navigation.
Indeed, requiring the federal government to continue to operate and maintain
a project after the Corps relinquished control would be inconsistent with the
very purpose of deauthorization. It was clearly reasonable for the Corps to
adopt the cost-sharing formulas outlined in the catchall category for projects
with other purposes when determining the cost-share for the closure portion of
the MR-GO project. Because the Corps’ reliance on the cost-sharing provisions
in the 1986 WRDA was reasonable, we defer to that judgment under Chevron.
CONCLUSION
For the foregoing reasons we reverse and render judgment for the Corps
in part as concerns the cost allocation formula in the MOA with Louisiana that
accompanied closure of the MR-GO, but we dismiss for lack of jurisdiction
projects and their funding” in part by “establish[ing] new cost-share formulas, resulting in
greater financial and decision-making roles for local stakeholders.”).
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Louisiana’s challenge to the proposed, but not final, agency action for cost
allocation concerning the MR-GO ecosystem restoration.
REVERSED AND RENDERED IN PART, DISMISSED IN PART.
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